Naming a 62-year-old from the furniture trade to replace him hints at how unprepared the family was for a revolt
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By Rob Cox
SHANGHAI (Reuters Breakingviews) — Ford Motor’s many flubs under Mark Fields were becoming existential for the $43-billion carmaker’s founding family. Two weeks ago, a majority of those shareholders not named Ford voted to abolish the family's super-voting stock.
The Fords took the hint, and the chief executive is now leaving. But naming a 62-year-old from the furniture trade to replace him hints at how unprepared the family was for a revolt.
That Fields' job was in jeopardy was no secret. The 36 percent decline in Ford shares since he replaced Alan Mulally nearly three years ago was the mathematical manifestation of investors' discontent in his stewardship. Even General Motors only withstood a 10 percent slide, while Fiat Chrysler and Tesla both increased strongly.
Despite robust investment, Ford is perceived to be lagging rivals – not just Tesla but even dowdy GM – in developing the next generation of electric and self-driving cars. Car sales are down this year, and margins are under pressure.
This sparked a last-ditch move by Fields a week ago to cut white-collar workers, potentially irritating jobs-obsessed President Donald Trump, with whom the company clashed over plans to move production of some small cars to Mexico. It backtracked on that decision, in part because of slack demand for those vehicles.
All these woes coalesced at Ford's annual meeting. Not only did shareholders call out Fields. Some 35 percent of them also voted to scrap the dual-class share structure that gives the descendants of Henry Ford two-fifths of the vote with less than two per cent of the stock. Stripping out the family’s votes meant that at least 58.5 per cent of investors favored moving to one share, one vote — an act of open rebellion.
What's surprising is the family's solution: appointing an old executive from an unrelated industry. That worked with Mulally, a former Boeing executive, who arrived in 2006 and kept Ford from bankruptcy. Jim Hackett, who runs Ford's autonomous vehicle division, is a year older than Mulally was. He ran another old Midwestern industrial company, furniture maker Steelcase, for nearly two decades. The company went public in 1998 at $28 a share – a price it has not seen since.
CONTEXT NEWS
• Ford Motor CEO Mark Fields is set to leave the carmaker as part of a shake-up that includes other top executive changes as the company's shares hover near a 52-week low, several media reported on May 22.
• Forbes and the New York Times reported James Hackett, head of the Ford unit that works on autonomous vehicles, would take the reins. An announcement could come as early as Monday.
• Ford's board of directors and chairman Bill Ford Jr. had been unhappy with the company's performance, and sought more reassurance that investments in self-driving cars, electric vehicles and ride services would pay off.
